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Anti-avoidance rules:
Transfer pricing There are no specific transfer pricing rules, but
the tax authorities can apply a general anti-avoidance provision if an
arrangement is deemed to be artificial or designed to reduce tax.
Under a clause for connected parties, where a transaction is deemed
not to be at arms length, allowable deductions are restricted to the
lower of the amount of the expense, 5% of gross turnover or 75% of
net profits (pre-expense). When interest is paid at a noncommercial
rate, the excess is disallowed for tax purposes.
Thin capitalization Interest paid is deemed to be a dividend where
the debt-to-equity ratio exceeds 5:1 and the interest is paid to a
connected party that is not a company, or interest is paid to an arms
length party where the loan is secured by assets belonging to a
connected party that is not a company.
Controlled foreign companies No
Disclosure requirements There is a duty to notify the tax
authorities about arrangements that reduce tax.
Other When an individual transfers assets abroad and this gives
rise to income to a nonresident that can be, now or in the future,
enjoyed by an ordinarily resident taxpayer, the income of the
nonresident will be taxed on the ordinarily resident taxpayer, unless it
is a bona fide commercial transaction and the purpose is not to avoid
tax. The general anti-avoidance provisions also may apply.
Compliance for corporations:
Tax year The tax year is 1 July to 30 June. Companies are subject
to tax in their accounting period; if the accounting period exceeds 12
months, it will be divided into two periods.
Consolidated returns Consolidated returns are not permitted;
each company must file a separate return.
Filing requirements A tax return, along with audited accounts or
an accountants compilation report, as applicable, must be submitted
within nine months from the accounting year end. Advance payments
of tax based on 50% of the previous years tax must be made by 28
February and 30 September. The final payment (or refund request) is
due at the time the tax return is filed, i.e. within nine months of the
accounting year end.
Penalties There are surcharges for the late payment of tax and
penalties for the late filing of tax returns and for errors or omissions in
the tax return/payment.
Rulings An advance ruling can be obtained from the Commissioner
of Income Tax.
Personal taxation:
Basis Individuals are taxed on income accrued in or derived from
Gibraltar and, if the individual is ordinarily resident, also on nontrading
worldwide income (except rental income from foreign property).
Individuals who are present in Gibraltar for less than 30 days per year
are exempt.
Residence An individual who is present for at least 183 days in a
year or 300 days in any three consecutive years is ordinarily resident.
Presence is defined as any part of a 24-hour period commencing at
midnight.
Filing status The income of a spouse is taxed separately.
Taxable income All trade and employment income accrued in or
derived from Gibraltar is taxable and, in the case of an ordinarily
resident individual, worldwide income also is taxable. Interest income,
royalty income and income from foreign property are not subject to
taxation. Expenses incurred for the production of taxable income may
be deducted for tax purposes.
Capital gains There is no capital gains tax in Gibraltar.
Deductions and allowances Personal allowances are available to
the taxpayer and his/her spouse. There also are allowances for
children, dependent relatives, marriage, nursery school, life
insurance, approved pension scheme contributions and medical
insurance. Gibraltar offers mortgage interest relief and a home
purchase allowance.
Rates Gibraltar has a dual tax system, under which a taxpayer is
free to elect between an allowance-based system and a gross
income-based system.
Rates under the gross income-based system are split between gross
income of less than GIP 25,000 and gross income exceeding that
amount. The rates on income under GIP 25,000 are 6% on the first
GIP 10,000, 20% between GIP 10,001 and GIP 17,000 and 28% on
the balance. The rates on gross income exceeding GIP 25,000 start
at 16% and peak at 28%. The rates start to reduce for gross income
exceeding GIP 105,000, up to a minimum of 5% for income
exceeding GIP 700,000.
The allowance-based system has a reduced rate of 14%, a standard
rate of 17% and a rate of 39% for taxable income exceeding GIP
16,000.
The minimum amount of tax payable by individuals holding Category
2 residence status (available to high net worth individuals) is GIP
22,000 per annum, and the maximum tax is GIP 27,560. Executives
holding HEPSS status are limited to tax on the first GIP 120,000 of
assessable income under the gross income-based system.
Other taxes on individuals:
Capital duty No
Stamp duty Stamp duty applies to purchases of Gibraltar real
estate, as follows: property costing under GIP 200,000 is exempt; for
property with a cost between GIP 200,001 and 350,000, the rate is
2% on the first GIP 250,000 and 5.5% on the balance; and for
property with a cost exceeding GIP 350,000, the rate is 3% on the
first GIP 350,000 and 3.5% on the excess. For first and second-time
buyers, there is no stamp duty due on the first GIP 260,000 of the
cost of the property, irrespective of the total cost.
Capital acquisitions tax No
Real property tax No, but stamp duty applies (see above).
Inheritance/estate tax No
Net wealth/net worth tax No
Social security Employee contributions are payable on a weekly
basis, up to a maximum of GIP 25.16 per week.
Compliance for individuals:
Tax year Self-assessment is made on an annual basis; the year of
assessment is the period of 12 months commencing on 1 July and
ending on 30 June of the following year.
Filing and payment Tax on employment income is withheld by the
employer under the PAYE system and remitted to the tax authorities.
Income not subject to PAYE is self-assessed and the tax return must
be submitted by no later than 30 November following the year of
assessment. Income not included under PAYE requires advance
payments of tax based on 50% of the previous years excess.
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